New Nordic model aims to give electricity consumers better and cheaper supply
The Nordic electricity transmission system operators are introducing a revolutionary new way to purchase the reserves needed to ensure electricity consumers have stable power at all times.
The Nordic utility regulators have just approved a method for purchasing the reserves that Energinet and the other Nordic system operators buy every day to maintain balance in the electricity system.
Many megawatts of reserves in the form of electricity generation or demand-side response are always waiting in the wings in case a short circuit occurs in the power grid, a power station goes offline, the weather deviates from forecasts, etc. They can ramp generation or consumption up or down in a split second, or a few minutes.
As the electricity system becomes increasingly driven by wind and solar power, the TSOs will stop purchasing fixed amounts of reserves and instead forecast the exact need hour-by-hour, notes Thomas Dalgas Fechtenburg, Head of Ancillary Services at Energinet.
“As more renewable energy dependent on the wind blowing and the sun shining is generated, and as electricity consumption becomes more fluctuating as we electrify society – with electric vehicles, heat pumps and large hydrogen plants – the specific need for reserves will vary further from the ‘constant’ on an hourly basis,” he says.
The TSOs will therefore migrate from a ‘flat rate’ subscription to a flexible plan – to use an analogy from the telecommunications sector. The aim is to ensure higher security of supply and cheaper prices for electricity consumers, as reserve purchases become more accurate, based on the real need.
The new method is therefore called dynamic dimensioning.
The ability to purchase reserves across Nordic borders, via a common platform, will also ensure more efficient and cost-effective operation of the electricity systems. The same applies to more intelligent purchasing, drawing on reserve power in neighbouring countries, and the fact that these rarely need activation of reserves at the same time.
Energinet has been working on the new system for about three years. Due to the high proportion of fluctuating electricity generation from wind and solar power, Denmark has been one of the first countries to experience the need to rethink reserve purchases.
The costs of ancillary services have risen significantly in Denmark in recent years. From DKK 1.4 billion in 2021 to DKK 2.7 billion in 2022. In addition to the increasing need for reserves flowing from the green transition, the price of ancillary services is rising as more traditional power stations (which have historically supplied reserves) are shutting down or operating for fewer hours, and new players are only now entering the market.
The new method will be implemented in stages. The first step will be to predict deviations in forecast consumption and generation from wind turbines and solar parks.
“It sounds simple that we need to coordinate more between countries, and buy more in some hours and less in others, but this requires sophisticated forecast models based on advanced machine learning. These have to predict the probability of outages and deviations from the forecast generation for wind turbines and solar parks early in the morning the day before operation. It’s important that we move to a completely new and more efficient way of buying reserves, while also ensuring that consumer supply remains at least as good as it is today,” says Thomas Dalgas Fechtenburg.